Life Glimmers Amid Ruins of Greek Decay: Suzy Hansen

(Corrects 96th paragraph to say Konstantinos Karamanlis is
the uncle of former prime minister.)

June 25 (Bloomberg) -- A couple of months ago, around the
time Greece passed new austerity measures to ward off economic
catastrophe, Nicholas Papandreou, the very tall brother of
Greece’s Prime Minister, George Papandreou, was riding the Metro
in Athens. The Papandreous, now in the third generation of a
Socialist political dynasty, live in rented houses, drive
Priuses, and, apparently, take the subway, even during times of
extraordinary anger toward the government.

“Nick! Why did your brother bring in the IMF?” one
passenger called out.

“No choice. It was either that or no one gets paid come
July 1st,” Papandreou, an economist and novelist, replied.

“Well, I am glad to see you taking public transport,” the
passenger said, prompting another rider to pipe in, “I always
see Nick on the Metro!”

“Excuse me, but what do you do for a living?” Papandreou
asked the first man.

“I’m a doctor.”

“Did you ever take side money from your patients?”

Everybody was listening. “Yes.”

“Are you still taking money on the side?”

“Not anymore.”

“Why?”

“Because now, the way things are, I’d be lynched.”

“See?” Papandreou said. “That’s one good thing George
has done so far.”

Ancient Graveyard

Papandreou tells this story while sitting at a long table
at the Andreas G. Papandreou Foundation, a beautiful old house
in a slightly run-down part of Athens. A terrace off the back
overlooks the city’s ancient graveyard. Family photos hang on
one wall; Nicholas’s books and pamphlets about his father,
Andreas, line the other.

Papandreou, who grew up in Canada and the U.S., sounds
American. He portrays his efforts to help out during the crisis
as something any member of a family business would do. Indeed,
the past few months have seemed like an all-hands-on-deck
situation: Nick the Novelist Brother isn’t only placating
doctors on the Metro but was taking off to Qatar to try to
secure foreign investment for his country.

That the intimidation of medical professionals counts as a
positive development might indicate just how dysfunctional Greek
society has become. It also shows that the Papandreou
government’s attempts to reform Greece will require nothing less
than a societal revolution, affecting everyone from cab drivers
who don’t give receipts, to tax collectors who bribe lawyers, to
college kids who dream of nothing more than a good, solid
pension.

‘Shadow Economy’

Greece’s “shadow economy,” estimated at 20 percent to 30
percent of the country’s gross domestic product, depends on the
wonderfully named fakelaki, also known as “little envelopes”
or “bribes.” In general, reliable economic data for Greece can
be difficult to find.

It’s part of a state of affairs that includes a bloated
public sector and a stunted private one, both legacies of a
political system prone to patronage and corruption. The cruel
result amounts to 300 billion euros ($369 billion) in debt ---
115 percent of the country’s GDP, or about $27,000 per Greek
citizen.

The 110-billion-euro bailout from the European Union and
the International Monetary Fund includes strict austerity
measures intended to shrink the budget deficit to 3 percent of
GDP in three years from 13.6 percent. The prospect of that has
thrown Greece into chaos.

Political Suicide

The Greek people are angry. While young anarchists wielding
Molotov cocktails are getting most of the attention, there are
far greater numbers of Greeks stewing in their tiny apartments,
furious with their leader for capitulating to the markets and
the IMF and for saddling the Greek people with a life-changing
burden.

Experts and average Greeks alike told me that Prime
Minister Papandreou and Finance Minister George Papaconstantinou
must do things to rescue their country’s finances that would
normally be tantamount to political suicide.

“They’re already dead,” says the former Finance Minister,
onetime member of the opposition New Democracy Party, and free-market crusader Stefanos Manos, speaking of the government’s
austerity measures. “They can’t die twice. Why not do the right
thing?”

When I first arrived in Athens in May, expecting to see
rampaging youths attacking policemen, I marveled at the apparent
prosperity and pleasantness of everyday life. The Metro even has
one of those fare systems based on trust--like Switzerland!

State of Shock

It wasn’t long before darker sentiments became palpable.
The Greek capital these days exists in a state of shock,
suspicion and bewilderment, not unlike the way New York felt in
the fall of 2008 after Lehman Brothers collapsed --- a sense
that strange forces had created financial scenarios no one could
yet understand. Something has gone terribly wrong with the
system.

For the little nations on the edges of the so-called first
world, market-happy modernity can be harder to keep up with and
easier to turn against during difficult times. In Greece, the
past few months have been a brutal conclusion to what had been a
glorious party of admission to Western consumer capitalism.

Civil War

“The best way to think of it is to think of Greece as a
teenager,” says Stathis N. Kalyvas, a Yale University political
scientist who was in Athens when I visited. “Many Greeks view
the state with a combination of a sense of entitlement, mistrust
and dislike similar to that of teenagers vis-à-vis their parents.
They expect to be funded without contributing; they often act
irresponsibly without care about consequences and expect to be
bailed out by the state, but that only increases their sense of
dependency, which only increases their feeling of dislike for
the state. And, of course, they refuse to grow up. But like
every teenager, they will.”

The story of Greece recalls a familiar old world/new world
tale: a poor country 30 years removed from a devastating
communist-royalist civil war and five years from a fascist
military dictatorship finds itself, in 1981, in the maternal
embrace of European Union membership, flush with all the easy
funds that follow.

Two decades later come the success of the 2004 Olympics,
the arrival of Dolce & Gabbana, the proliferation of credit
cards, and an airport as polished as a museum. Life, on the
surface, looks good though the old, unhealthy habits continue:
public-sector employment for life, politicians with stuffed
pockets, an aversion to foreign investment, snail-like growth,
communal life that keeps people happy at the taverna table but
stifles individual creativity, a sense that beating the
“system” is what the smart people do.

New Games

What happened next took an unexpected, Don DeLillo-esque
twist: Men in New York and London devise new games to play with
the world’s money. The world falls into recession.

In Greece, the economy sputters, the ruling political party
refuses to reduce spending before the 2009 election, and the old
habits become harder to conceal --- more so because the then-ruling party consisted of, as the young Greek novelist
Constantine Abazis puts it, a bunch of “morons.”

And like the wife of an alcoholic who willfully disregards
the vodka bottle stashed in the closet, the EU looks the other
way.

“Greece has a very cosmopolitan, international elite, and
at the same time a rapidly deteriorating quality of the
political class,” says Loukas Tsoukalis, president of the
Athens-based think tank ELIAMEP. “In recent years a number of
(European) Commission officials knew that the fiscal situation
in Greece was worse than portrayed. The surveillance system has
clearly failed.”

Cushy Jobs

Stereotypes of Greek people as lazy and sun-stroked may
have roots in the public sector: For decades politicians plied
poor citizens with cushy jobs and pensions in exchange for votes.

The 2004-09 conservative New Democracy government added
over 85,000 public-sector jobs in its tenure; the public sector
accounts for 40 percent of Greece’s GDP and 15 percent of the
active workforce. The government isn’t even sure how many people
it employs.

As Jens Bastian, an ELIAMEP economist, explains, “Every
Greek has a relative who works as a civil servant in the public
sector, excluding the military and police. Reducing employment
levels in the public sector immediately becomes a very touchy,
family affair.”

Across the Region

The Greek crisis reminds us that while Greece is a part of
Western Europe, it is also a place where hammers and sickles and
“F--- the Police” decorate the city walls; where references to
civil wars and world wars and postwar American meddling come up
in daily conversation; where immigrants fleeing violence and
economic plunder scramble atop the life raft of Greece’s fragile
European shores, only to fester in homogenous Athens.

It is also a country that in some ways still mirrors the
lands across the Mediterranean --- the countries of North Africa
and the Middle East that continue to be strangled by Third World
ways and won’t simply acclimate to the rules of the West as one
might have hoped.

If the Greeks have one thing going for them, it’s a deep,
proud sense of their country’s beauty. Everywhere I went, the
average Greek would complain about this or that, and then
mention the islands or the countryside, shrug, smile, and say:
“But, you know, it’s a beautiful country.”

“You know, I think these people in America, they are
jealous. Because...we have such a beautiful country.”

“Everything here is s---. But it’s a beautiful, beautiful
country.”

Strikes and Protests

On May 20, a beautiful day in the beautiful country’s semi-beautiful capital, Greeks launched another general strike and
protest. It fizzled. During the previous week’s protests, the
branch office of a bank in central Athens was firebombed. Three
employees, including a pregnant woman, had died of smoke
inhalation.

More recent protests have been less destructive, perhaps
because of the overwhelming presence of riot police with their
shields, billy clubs, tear-gas guns, and nine-millimeter pistols.

The police closely tracked the clusters of anarchists, who
bore the international uniform of the 21st century’s petulant
warrior class: black hoodies and boots, backpacks, pale skin,
skittish, overloud laughter. The rest of the protesters looked
rather upscale as they walked slowly and patiently to the head
of Syntagma Square, where the lovely yellow Parliament building
overlooks the area from a hill.

At sunset, in that truly celestial Athens light, the rest
of the square would be in shadow, but the Parliament building
glowed. This was where the energetic protesters of Athens spent
their days, shaking their fists and trying to break down the
doors.

Going on Strike

Greeks believe in protest. During a week in Greece, I
witnessed four demonstrations, including one rather elegant
march through the fancy neighborhood of Kolonaki, the protesters
mourning crimes by the Turks in the Black Sea in 1922. Tourism
employees protested at the Parthenon; others went on strike at
the docks in Piraeus. This was normal.

Since the military dictatorship, the leftist ideological
consensus has required that Greek people generally ignore, if
not tolerate or condone, a certain level of dissident violence
in addition to agitation. But that day, the mood among
protesters was weary, almost defeated.

After the Greek government accepted the IMF bailout,
officials began to impose not only reforms but punishments.
Pension plans and wages were cut by 15 percent to 20 percent.
Value-added and excise taxes were raised twice.

Tax Collection

Bank accounts were opened up, and names were named: Those
57 doctors who didn’t pay taxes, for example, were identified to
the public. Tax-collection directors were replaced, employees
were shuffled to new posts, bribery complaints were investigated.

Even some 16,000 rich Athenians who dwell in the
magnificent northern neighborhoods of the city found themselves
targeted for failing to disclose that they own swimming pools on
their tax returns. It’s estimated that a third of economic
activity produces no tax revenue whatsoever, an annual tax
shortfall of approximately 25 billion euros a year.

The Minister of Tourism resigned after it was revealed that
her husband, a beloved pop star, owed millions in back taxes.
Bastian, the economist at ELIAMEP, told me that, for the first
time, a Greek government was cracking down on a way of life.

It had no choice. But to get the people to change ---
quickly --- the politicians needed to make sacrifices, too. The
Finance Ministry made it clear the crackdown would extend to
government officials: “According to a preliminary investigation,
70 Finance Ministry employees have real estate holdings ranging
from 800,000 euros to 3 million euros in value.

Property Investments

The average real estate holdings for these employees is
valued at 1,228,337 euros, while their average declared income
is 50,834 euros. The Finance Ministry is launching
investigations into all these cases, although it will have to do
much more than that.

Greeks reacted to questions about how the country ended up
with so much debt with almost comic confusion.

‘‘I was also asking myself this: What were they doing?’’
says Michalis Chrysochoidis, the Minister of Citizen’s
Protection. He mentions former Prime Minister Kostas Karamanlis.
‘‘[He] created a utopia, an illusion that we can live well
without trying to make things better.’’

Many observers described Karamanlis, who was elected in
2004 on an anticorruption platform, as an easygoing manager who
didn’t control his cabinet. Then in 2008 and 2009, when the New
Democracy party had to run for reelection, the administration
completely stopped trying to reduce spending.

‘Big Issue’

‘‘The deficit was initially projected at less than 4
percent, and it turned out to be 13.6 percent,’’ ELIAMEP’s
Tsoukalis says. ‘‘Under normal circumstances it might not have
been the end of the world. But it happened at a time when
everyone had realized that sovereign debt had become the big
issue. Faced with the prospect of the 2009 election, the
previous government showed negligence. They just let it go.’’

This partly explains why anti-corporate sentiment isn’t
among the grievances widely aired in Greece. Resentment is
reserved not for the rich but for the government.

Greek banks didn’t engage in reckless financial schemes the
way American banks did, showering easy credit on people who
couldn’t afford to pay it back. It was the government that did
most of the borrowing.

‘‘Everywhere else in the world the banks brought down the
economy and pressured the government,” says Gikas Hardouvelis,
chief economist at Eurobank. “Here the state finances are
pushing down the banks.”

Foreign Investors

I told Hardouvelis a story I had heard about a Greek
entrepreneur who couldn’t persuade foreign investors to trust
Greek banks as his backers anymore.

“Investors feel that if the country defaults, Greek banks
will be in trouble,” he says. “Still, the exposure to Greek
bonds is low. Greek bonds are not owned by domestic banks.
They’re mostly owned by foreign banks.”

For example, contraction in countries that need to cut
expenditures would also affect other European countries. A drop
in demand in Spain would mean a drop in demand for German cars,
triggering declining incomes in Germany and leading to a
contraction there.

“These channels of contagion are really just beginning to
become evident,” Levy says.

Government Scandals

Hardouvelis, the Eurobank economist, served in the 1996-2004 government of PASOK, under Prime Minister Costas Simitis,
who was a promising leader until his government dissolved in a
storm of scandals.

Simitis had presided over a period of transformation that
coincided with a high point in recent Greek economic history:
2004, the year of the Olympics. In readying itself for the
international extravaganza, the nation spent money like a
working-class bride on her country club wedding, thinking it the
most important day of her life.

“Greece was an under-banked economy for a long time,”
Hardouvelis says. “Mortgages and consumer loans were
effectively prohibited until 1993. When that changed, together
with growth, credit expenditures grew faster than nominal
economic activity. But as long as there was growth, no one
worried.”

‘Nouveau Riche’

In 2004, Greek GDP growth was a strong 4.6 percent, mainly
fueled by the Olympics construction boom. The Games inspired
immense pride for the Greeks and served as a coming-out party of
sorts, an emblem of security and wealth.

“The facilities were maharaja-level luxury,” says
Stefanos Manos, the former Finance Minister. “Greece had the
mentality of the nouveau riche. We borrowed, and we spent.”

The nation hungered for new status symbols. A 2008 Nielsen
report found that, of all the countries in the world, Greece
cared most about designer labels, trampling Hong Kong (the
runner-up) in its taste for brand names.

Ayis Georgoudas, chairman of Nak, a collection of shoe
stores and international label outposts, rode this materialist
wave. When I met him at his office at a Bally store, it was a
Saturday and he was working. Three young women were helping a
wealthy couple trying on shoes that, at Bally, can cost as much
as 300 euros.

Upstairs in his small office, Georgoudas, 35, had a collage
of photos and clippings on the wall: Dostoyevsky and
Solzhenitsyn; Michelle and Barack Obama; Jesus Christ.

High-Top Sneakers

Georgoudas wore green high-top sneakers with black laces
and a white monogrammed button-down shirt. He is from
Thessaloniki, in Greece’s north, where he worked in his family’s
shoe stores as a kid. His family did well enough to send him to
New York University, where he received bachelor’s and master’s
degrees.

Within the past five years he expanded the family business
to 20 international brand chains, introducing Bally, Clarks,
Naturalizer and others, to Athens, bringing in 20 million euros
a year in sales.

“Some private-sector employees feel bitter about their
counterparts in the public sector,” Georgoudas says. But, he
explains, “I just love to work.”

Stefanos Manos applauds the recent decisions to cut wages
and raise taxes but believes more drastic measures are needed.

“The average pay is two and a half times the pay in the
private sector,” he says. In his view, more must be done to
create a competitive environment.

‘Little Truck’

“In Greece, you cannot rent a little truck to move your
refrigerator,” Manos says. “Why? To protect the truckers. You
have to hire a trucker. You have to get a parking permit. If you
sell your house, both parties have to have a lawyer--by law--to
participate in the transaction, and they’re guaranteed a
percentage of it. If I want to give my house to my son, both he
and I have to have lawyers. If Coca-Cola wants to take out an
advertisement during a news program on TV, a percentage of it
(20 percent) goes toward a pension fund for journalists. They
have so much money in there that journalists don’t even know or
care how much money they have!”

Then there are the bribes.

“Lawyers know that when a tax collector comes, he will ask
for a bribe. Doctors, too,” Manos says. “But that tax
collector has a job for life. A surgeon at the state hospital
expects something on the side. Otherwise, you can get your
operation in six months or more.”

Ships to Tourists

If ancient Greece is known for Zeus, democracy, and
civilization, modern Greece claims Aristotle Onassis and the
islands, which is to say, shipping and tourism. The two account
for more than a quarter of the country’s economy.

So far, only one has been affected by the crisis. In June,
hotels reported a 30 percent drop in sales, though you wouldn’t
know it from the number of tourists craning their necks from the
Plaka up toward the Acropolis.

Hoteliers complained that the overplaying of riots on
television had scared off travelers who didn’t know that civil
unrest in one neighborhood would hardly affect the frappe-drinking café conviviality of the next. The Acropolis and its
hill of ancient treasures hover literally above the fray.

There were murmurs of labor strikes at island ports, which
Nicos Vernicos, a shipping magnate and president of the
International Chamber of Commerce, passionately decried.

Internal Dynamics

I interviewed Vernicos across a divan at his luxurious,
art-filled home in the waterfront suburb of Glyfada. The house
radiated a quirky, restrained air that almost smelled of old
money; Vernicos Shipping Group is one of the longest-serving
members of a tiny, private club that seems to operate in its own
little maritime universe.

Although Greeks don’t do much exporting, they do ferry
around 15 percent of global goods. So the shipping companies are
far less vulnerable to the internal dynamics of the Greek
economy than they are to, say, trade between China and all of
Europe. Unfortunately for the Greeks, the very thing that keeps
the shipping industry based there, as in many countries, is that
it does not pay corporate tax.

Ship owners pay taxes based on tonnage but not on actual
shipping, providing little revenue for the Greek state. That’s
because 50 years ago, Greece passed something called Law 89, a
massive tax break for ship owners in exchange for pumping money
into the economy, according to Clay Maitland, a managing partner
of the Marshall Islands ship registry.

Different Flag

The deal still provides Greece with a lot of jobs,
something it can’t afford to lose.

“It’s kind of like the financial industry in New York,”
Maitland says. The shippers “can move.”

Manos agrees.

“You push them and they’ll simply hoist a different flag
and move out,” he says. “They have an escape clause. Because
of this clause, governments have been mostly reasonable.”

When I ask Vernicos about the tax issue, he says: “Greek
shippers are much-above-average patriots, and they support their
country.” Later, he proudly displays his collection of
Hellenic-themed art, including an Andy Warhol of Alexander the
Great.

Vernicos’ business dates to the mid-19th century, when his
family rowed goods across the Bosphorus in Constantinople. His
father served as a member of the pre-junta Parliament, and the
young Vernicos spent time in jail for activities against the
military dictatorship.

After the turmoil of the 1970s, he settled down to navigate
the rocky seas of the country’s fledgling democracy, as well as
something unexpected: the European Union.

The EU

When Greece joined the European Community in 1981 it was
embroiled in conflict with Turkey, an issue that still motivates
Greece to spend billions on its military. Greece was admitted to
the EU largely because of the credibility of the Prime Minister
at the time, Konstantinos Karamanlis (the uncle of former PM
Kostas), and Europeans’ attraction to all things old and Greek.

Karamanlis was soon replaced by Andreas Papandreou (the son
of George and the father of the current George), who campaigned
on anti-NATO, anti-EU, and anti-American populism, even though
he had an American wife.

“People familiar with him knew he didn’t mean it,”
ELIAMEP’s Tsoukalis says. “But the adjustment was not always
painless.”

At the time, Papandreou p‘ere had to reunite a fractured
country, so with generous socialist policies he won support from
the lower classes and the countryside.

‘Political Wisdom’

“He brought new people into the Greek political scene, he
gave marginalized people their rights. But redistribution was
done at the expense of future generations.”

He also kicked off the addiction to pension plans, many of
which went to civil war veterans--something staunchly defended
by at least one of my ranting, receipt-hating taxi drivers.

“The crisis did not happen overnight. We’ve been
overspending for the last 25 years,” says Manos. “It was
accepted political wisdom that if you gave out jobs for life,
this would guarantee the votes of entire families. I think it
turned out to be correct.”

The father-son conflict at the heart of the Greek political
crisis makes sense in a country dominated by family dynasties.
Papandreou the son, who is bookish and quiet, now must clean up
the mess made by Papandreou the father, who is flamboyant and
charismatic --- or so the story goes.

“Like most children, Papandreou wants to avoid the
negative aspects of his parents,” Vernicos says. “He knows
better than all of us the weaknesses of his father and wants to
be different.”

After Davos

Even so, the PASOK government was slow to recognize just
how bad the situation was.

“Everything changed after Davos,” Vernicos says,
referring to last winter’s Davos Economic Forum. “When the
bankers and politicians meet each other in Davos, you have Bill
Clinton and Bill Gates wearing ski anoraks, and they all speak
the truth. After Papandreou went in February, he realized the
scale of the danger. He changed completely after he came back
from Davos.

‘‘Who is educating the Greek government and the Greek
people and European leaders?’’ Vernicos continues. ‘‘The markets.
If you see what Euro leaders were saying a few months ago and
now, there’s a world of difference in (German Chancellor Angela)
Merkel and the others. The markets are the harshest tutors.’’

The Ouzo Flows

Suddenly, the good socialists of PASOK must transform
themselves. While I was in Athens, the party was courting a
Chinese shipping company, Cosco, which made a deal to take
control of Athens’s main container dock in its Piraeus port and
was eyeing land for a logistics center in an environmentally
beleaguered area called Thriasio.

Although the labor class regarded Cosco as a threat, the
political elite rejoiced; even Greek socialists are pouring ouzo
for the smiling Chinese communist-capitalists.

‘‘All these guys are now running after Mr. Cosco,’’
Vernicos says. ‘‘They’re having to lick where they spat.’’ But
he is optimistic. ‘‘For the first time we have a team managing
Greece that doesn’t care about political gain, they just want to
do the best for their country,’’ he says. ‘‘They really don’t
care about being reelected.’’

For all the hardship visited upon Greece, extreme poverty
keeps a low profile in Athens. In recent decades the country has
seen an influx of Albanian workers who more or less look Greek
and work very hard. They speak the language and have secured a
place in society.

Dumping Ground

But the hundreds of thousands of other immigrants in Athens
--- the Africans and the Pakistanis, the Bangladeshis and the
Afghans, the Kurds, the Iraqis, the Somalis, the Moroccans and
the Nigerians --- are different.

Greece is the entry point for refugees and migrants hoping
to make their way to the rest of Europe. They arrive in tiny
boats, aspiring to smuggle themselves deeper into Europe. If
they get caught en route, according to EU law, they can be
thrown back into the dumping grounds of Greece, the first
country they entered.

‘‘We are the guardians of Europe,’’ Minister Chrysochoidis
says. ‘‘This is a huge and terrible problem, a human problem. We
need an independent authority of asylum, so refugees are
protected and traffickers are punished. Ten percent migrants for
a small country is a lot.’’

Selling Socks

One evening, I went to see where the immigrants lived, in
an area referred to as Sofokleous, which is close to the center
of town. It was Sunday, and very quiet. Iason Athanasiadis, a
journalist who has reported from Iran and Afghanistan, tells me
to leave my handbag at home and to dress down in the hopes that
we’ll look like drug addicts in search of a fix.

Suddenly we turn a corner and the streets are crowded with
human misery. Some people seem healthy, selling socks off the
sidewalk, screaming at each other. Others are bloodied and
battered, their clothes half ripped off, shoes missing.

You could look to your left and see three men sticking
needles into their ankles; to your right, a woman sidles up to a
man for some drugs. She looks as if she has been beaten, and her
flesh seems to be melting off.

We turn up a side street and spot a man inside a taverna
called Klimataria, which opened in 1927. It’s a happy-looking
place. It’s also empty. Business has dwindled 70 percent, and
soon the restaurant will be moving.

Existential Angst

The immigrants sometimes attack each other in the street
‘‘with swords,” according to the owner, Pericles Spiridou. Any
tourists who come near the restaurant flee in fear. Only three
years ago, this had been a fashionable part of town. Then the
police decided to clear the main squares of several Athens
neighborhoods, essentially corraling the migrants into these
back streets. In a country with little industry and few jobs,
there wasn’t much for these foreigners to do but sell whatever
they could on the street--handbags, trinkets, drugs, themselves.

Spiridou is a liberal-minded person. He doesn’t disparage
the immigrants. Instead, like many other Greeks, he speaks of
the state. Where is the regulation? Where are the police?

Forty-nine years old, with thick, wavy white hair, Spiridou
also has existential concerns.

“We’ve lived through many things,” he says. “Civil war,
a dictatorship, the fall of communism. Now what I hope is that I
live to see the fall of capitalism. That’s my dream. And I will
see it.”

He glances toward the streets outside, where Greece is
anything but beautiful.

‘Groundless Hysteria’

Two weeks after I returned from Greece, the Finance
Minister, a well-regarded figure who drives a battered Subaru,
announced that the country was on track to meet its 2010 deficit
targets, boasting an almost 40 percent reduction in the deficit
in the year’s first five months.

Spending was down 10 percent; revenue was up 8 percent. He
dismissed rumors of bankruptcy as “absurd” and “terror-mongering” and urged the Greek people “not to bite the bait in
groundless hysteria.”

Bastian, the economist from ELIAMEP, describes the Finance
Minister this way: “When you meet him, you feel as though, if I
have to trust a politician in Greece, this is the one I trust.”

Prime Minister Papandreou, meanwhile, was taking to the
road, courting Libyans as potential investors, a possible
lifeline along with the Chinese. Rumors of a cabinet reshuffling
circulated.

As of May, about half of all Greeks said they supported the
Papandreou government’s bailout measures.

Summer Heat

Meanwhile, bad news continues to mount. Moody’s downgraded
the country’s debt four notches, to junk status, and private
investment remains weak. The next tax increases kick in on July
1. Metro employees went on strike because 285 temporary
employment contracts were not renewed.

The arrival of summer brings respite, at least insofar as
escaping the feverish temperature becomes the major
preoccupation and Greeks of all stripes decamp to the islands.

When they return in the fall, the IMF will issue a formal
progress report in advance of the next round of loans, and it
will start to become clear whether there is hope for a new
Greece. “Until then,” says Bastian, “it will be too hot to
realize what it all means.”